Mitch Daniels, the State of the Union address and deficit realities

Popular Indiana Governor Mitch Daniels has been chosen to deliver the Republican response to President Obama’s State of the Union address tonight. Ideas about how best the government might respond to the limping economy and tackle the enormous federal budget deficit are sure to feature prominently in both speeches. Daniels comes to such a discussion with baggage, however, having headed the Office of Management and Budget under George W. Bush from 2001 to 2003, when the country’s projected budget surplus of $236 billion ran down a sink hole where it became a $400 billion deficit.

The Bush years, defined by tax cuts and war spending, set the country on a course of historic fiscal mismanagement. Daniels, seeing the coming problem, recommended deep cuts in many agency budgets to compensate for the Bush policies but few of his recommended cuts were passed by Congress. When the economy dipped, Bush’s expanding deficit ballooned. Some fiscal conservatives at the time howled, including New York Times columnist Ross Douthat, who pointed at Daniels as a major part of the problem, saying that he had “carried water for some of the Bush administration’s more egregious budgets [and…] made dubious public arguments in support of his boss’s agenda.” That agenda included the war in Iraq, which appeared on the books under Daniels as an invasion without longterm estimates accounting for the inevitable occupation.

Sharp criticism of President Obama’s handling of the economy will feature prominently in Daniels’ response tonight, of course, and some of that criticism is sure to be accepted as legitimate among Americans across the political spectrum.

Any line of argument that accounts for today’s budget deficit as a result of economic stimulus spending under Obama, however, will not be legitimate for having been thoroughly debunked. As Daniels well knows, steep tax cuts for the wealthy, extravagant war and homeland security spending and the Wall Street-based financial crisis of the Bush years drained the surpluses piled up during the Clinton years.

The national public employees union– the American Federation of State, County and Municipal Employees– has released a video spotlighting Daniels’ years as Bush budget director and his recent decision to try and strip state workers of collective bargaining rights. The video is sure to play well with Democrats enraged at the virulent union busting and budget deficit hypocrisy of contemporary GOP politics.

Republicans, however, are likely to look past any Daniels connection to the Bush years (water under the bridge!) and see him instead in the context of the GOP presidential primary contest, which has offered up a slate of candidates who have tended to thrill voters less than they have embarrassed them with untenable policy positions and sordid personal histories. As petitions cropping up online asking Daniels to consider running for president have made clear, Daniels, whatever he may say tonight, may seem mostly like the experienced, levelheaded realist Republican voters had hoped would run this year.

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